TTM02302 - Tonnage Tax Elections: Example 2

Group companies with common accounting periods

There are three companies in a group: A Ltd, B Ltd and C Ltd. They decide they want to elect into Tonnage Tax on 1 July 2006, ie in a further window of opportunity. They have a common accounting date of 30 June each year.

The group writes to the inspector saying that A Ltd and B Ltd would like to come into Tonnage Tax with effect from 1 January 2005, whilst C Ltd would like to delay entry to the regime until 1 July 2007.

All three companies have the same accounting date, so they must all come into Tonnage Tax from the same date, which must be the beginning of an accounting period, not 1 January. The group must therefore decide whether:

• to accept that under the normal rule the election would first have effect from the beginning of the accounting period during which the election is made, i.e. 1 July 2006;
• to backdate its election to the AP commencing 1 July 2005, with the inspector’s agreement; it cannot backdate to 1 July2004, as this was before 1 January 2005);
• it wants to seek the inspector’s agreement to entry with effect from 1 July 2007; or
• there are sufficient exceptional circumstances to justify the group’s asking for the inspector’s agreement to delay entry to 1 July 2008.

In the absence of any request from the Group the default date will be 1 July 2006.

References